Not sure if this is the best subreddit to ask so feel free to direct me to a different sub if appropriate.
I worked as a public employee and I had a real bad workplace accident which forced me to retire and now I collect my disability pension benefits. To supplement my pension income, I started a consulting business under a Single Member LLC.
The rules of my pension are that if I make more than what my former position’s base salary, it’s deducted from my pension benefits. For example (not real figures), if the salary of my former job was $100k/yr and my current pension is $50k, I’m only allowed to make an additional $50k. If I make more than an additional $50k, then my pension benefits will be adjusted so that I’ll only make $100k. If I earn more than $100k/yr , then I’ll forfeit all pension benefits. This restriction expires on my 50th birthday which was the pension plan’s earliest retirement age.
I didn’t anticipate making this much money and I really don’t want to “work for free” so I’ll admit it’s a good problem to have.
Can I pay myself as a W-2 employee and file my company’s taxes as an S-Corp? If I file my LLC’s taxes as an S Corp, will the LLC still show on my personal income like it did when I filed as a sole proprietor?
That way I can control my personal income and just invest the rest of the companies profits until I turn 50 which is about 15 years away.
Thanks!
Two responses.
Talk to your CPA, you should have plenty of options. As a tax payer, you have clearly found a way around your disability, great job! Please get off public funding, we don’t want to pay for you.
Thank you 👍 and don’t worry, I still pay plenty of taxes and I personally contributed quite a bit of money into my pension for 15 years. In fact, the city I worked for most likely forced me out in order to eliminate their unfunded liability because I actually fought to keep my job.
You said turn 50 in 15 yrs. But paid in for 15yrs. No time after accident before running this business.
No time growing this business?
Impressive…
OP has an agreement with their employer. Their employer happens to be the city. OP doesn’t deserve to be guilted for negotiating the best deal for them just because their employer is the city.
Ridiculous. They are consulting now, forced into a new career path after being retired from the public service role. This was not a choice, nor a gamification.
They got hurt on the job while being a public servant. Period, end of story.
They are being compensated through a disability pension. This is not SS-disability.
Unless you happen to live in the same municipality the OP was a servant in, you are not ‘we’, and feel so entitled that you believe it’s appropriate to speak on that taxpayers behalf.
OP, thanks for your public service. You didn’t get paid nearly enough, and now that you got retired off the job, you’re due that meager disability pension. I’m sure you would MUCH rather have your career AND your physical capabilities back.
If you want to keep full disability, and it’s enough to live off, dump all or everything over your basic needs being covered into a SEP IRA. It’s pre-tax, so reduces your taxable income which is what is most likely reported to your disability fund.
Ensure your deductible expenses are being fully - and I mean fully - captured.
Alternately, structure your entity fully under your spouse and file separately.